Nissan to cut 11K more jobs, shut down some plants. What to know in Tennessee
Nissan announced that it's cutting an additional 11,000 jobs, bringing the Japanese automaker's total workforce reduction to around 20,000. This news comes after Nissan reported a devastating 88% drop in operating profit year-over-year.
Chief Financial Officer Jeremie Papin said the company expects a 200 billion yen ($1,352,111,000) operating loss in the first quarter, according to Reuters. Several factors including past leadership, weakening demand, and a failed merger attempt have all contributed to Nissan's dire straits.
Nissan is in deep trouble if the company can't significantly reduce operating expenses and boost sales soon. How did Tennessee's favorite automotive brand end up in such a tight spot?
Former Chairman Carlos Ghosn focused too heavily on sales volume and not enough on keeping the company's portfolio modern and competitive, said analysts. As a result, Nissan is losing sales to rival automakers. CEO Ivan Espinosa called full-year financial results "a wake-up call" during a press conference, Reuters reported.
Furthermore, the current market presents several challenges such as tariffs, weakening sales due to demand, and competition from popular Chinese automakers. Merger talks with Honda fell through, causing some serious setbacks for the company.
Nissan is experiencing a perfect storm of issues causing the automaker to struggle with sales and operating profit. So how (if at all) does this affect Tennesseans?
The Japanese automaker is closing seven plants to find cost savings of nearly 500 billion yen. Reuters said the ccompany did not give specifics on which plants it expects to close. According to Nissan, the automaker's Smyrna plant currently employs over 5,700 workers. The company employs around 21,000 workers in the United States.
Nissan is looking to maximize production at the Smyrna plant (its largest American production plant) as reported by CNBC on April 16. So, there's no telling where the Smyrna plant stands in Nissan's cost savings efforts, but previous plans to ramp up production could be a positive sign for workers.
Though Nissan didn't specify which plants would be closing, there are a few things that are clear about the company's path forward. Nearly 20,000 Nissan employees are at risk of losing their jobs and seven plants could shut down in the near future. Nissan also plans to "reduce the complexity of parts by 70%" which likely means increased local production to avoid heavy tariff costs.
The way Nissan vehicles are manufactured, where they are assembled, and who assembles them is about to change drastically. CEO Ivan Espinosa's new cost savings goal is an attempt to keep the brand afloat amidst one of the most trying markets automakers have seen in years.
President Donald Trump recently offered car manufacturers a reprieve from tariffs in the form of a new proclamation. On the other hand, future trade relations with China and other major trade partners remain unpredictable.
−Reuters contributed to this story
This article originally appeared on Nashville Tennessean: Nissan shutting down plants, cutting jobs. Will Tennessee be impacted?
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